A social pedagogue at Kastanienhof children’s home, in Krefeld, Germany, where the profession is widely recognised.

There's a loud shriek from the corridor outside the room where the senior residential care worker Sue Dodd is talking. She doesn't bat an eyelid. A few moments later, there is a guffaw of laughter. It's the normal hubbub of life with kids, in other words. But normality is very precious in this short-term children's home, Shaping Futures, in Stafford, run by the county council. Many of the five young people who spend up to 12 weeks here have experienced great trauma from difficult family backgrounds and failed foster placements; they badly need stability and good relationships with adults after very little experience of either.

Historically, the English residential care system has served children badly. Comparative studies with countries such as Germany and Denmark repeatedly showed wide disparities with England in outcomes: kids in care in England were less likely to be in school or training, more likely to get pregnant or be involved in criminal activity. Central to these continental care systems is the work of social pedagogues trained to nurture every aspect of children's social and emotional development.

Is there something about the social pedagogy training in the German and Danish system that could be applied in the UK?

The emphasis in social pedagogy is that relationship building needs to be at the centre of everything care workers do – cooking a meal, watching a television programme; all the everyday activities are opportunities for a pedagogue to develop better mutual understanding with residents.

Shaping Futures signed up to a pilot which brought pedagogues to the UK to work in residential care, and recruited two to work alongside its 16-strong team. The home is one of 30 residential homes in the £1.5m study, led by the Thomas Coram Research Unit of the Institute of Education (IoE) and commissioned by the then Department for Children, Schools and Families.

Social pedagogy is a widely recognised profession across many countries in Europe, particularly in Germany and Scandinavia, but it is little understood in England – and not easy to translate, so the idea behind the pilot project was to "show, not tell": by putting pedagogues to work with care workers, they could experience directly how it works in practice.

"I was massively sceptical," admits Kevan Williams, residential care worker at Shaping Futures, "I've worked in residential care for 20 years and I felt we had seen this kind of fad before. I didn't know what pedagogy was so I Googled it and it said something about education – oh no, I thought. I was very suspicious. I had long conversations with the pedagogues; there was loads of theory and I didn't have the education they had had so I did some reading. But the pedagogy training all the staff had was one hell of a trip; I found myself saying things I'd never said before. Staff were really opening up to each other. I saw how pedagogy could help me in everything, my work and my life."

"Pedagogy has given the English care workers a framework and a theory to explain why they want to work in a particular way. It's a very hard concept to pin down, but it values the time you spend with the children and staff and the relationships you build up," says Anna Lehnhardt, a social pedagogue from Germany.

The technique seems to have improved the standard of care at the home. Sixteen-year-old Cathy (not her real name) certainly noticed the difference. She is now in a foster placement but comes back regularly to Shaping Futures to see the staff. "Anna took time out to find out how residents felt. At first I didn't want to talk but she persisted. Before I came, I couldn't talk about my feelings and Anna helped with that. When I arrived here I was a little shit. I wasn't at school, I was smoking and sexually active. I had eating problems but now I've completely changed. I got a lot of support here and now I'm back at school and really enjoying it. I got off the alcohol and drugs."

Three of the five children in the home have returned to full-time education, the number of incidents in which children are physically restrained has plummeted and staff sickness has fallen. John Gregg, head of provider services for looked-after children in Staffordshire, attributes much of the improvement in the home since 2009 to its use of social pedagogy techniques. "If you look at outputs, Shaping Futures was rated satisfactory by Ofsted. It's now rated as good with outstanding features. Improvements have been tenfold in the way the staff engage with young people, the way they use relationships, the culture within the home. We've seen an increase in the number of children we've been able to return home."

There have also been plenty of practical changes in how the home is run; the office is no longer used as a sanctuary by staff, and it's not locked. There is more emphasis on staff and residents doing things together, such as renting a DVD and getting in snacks. The biggest – and most controversial – change was getting rid of the credit system whereby the young people could earn pocket money for good behaviour; it had initially worked but became a source of constant pestering and cynicism among the young people. Now staff rely on the strength of their relationships with the residents to work through behaviour issues.

"Here's an example of how it has changed the way I work," explains Williams, "Last night two residents were smoking in their room, which they are not allowed to do. They had ignored Anna, the pedagogue, and she was angry. In my old way I would have flown in and given them a barrage; I've a strong voice, I'm a big man and I can be intimidating. Instead, I just sat down and listened and reassured them that we were there to care for them. We ended up, the five of us, having a very emotional conversation about why they play up, and it has really broken some barriers. Now we are planning to record some of the things they said with some music."

A difficult situation that could easily have escalated was defused. For Williams, the project has enabled him to work, as he puts it, from the heart again. "We got lost in this country. It was ridiculous in my view because we had forgotten that we were working with children, not a product. There were so many risk assessments and outcomes," says Williams, who believes care work had got buried in a morass of form filling and risk aversion that crippled the capacity of staff to work effectively with the children they were looking after.

"It's brought back spontaneity and creativity," agrees Dodd. "We've taken the kids away on holidays and trips, we've set up a poetry competition and badminton and sometimes that means procedures such as contact forms take second place. Staff are happier and that makes them more willing and flexible. Historically, there has been a big blame culture in residential care but the project has given staff the confidence to admit mistakes, and they can help each other out."

Others welcome it as a shift back to the way social workers were trained in the 1970s. "Frequently, staff will say that it is what I came into social work for," says Claire Cameron, reader in education at the Thomas Coram Research Unit, who has been leading the pilot project. The IoE believes that adopting more social pedagogy techniques could help reduce the high turnover of residential care staff. The comparable job in Denmark or Germany is popular and highly respected, with social pedagogues typically being graduates. Yet, crucially, pay levels are comparable and because staffing levels abroad are usually lower, pedagogy is not necessarily more expensive.

But further expansion of social pedagogy will require vigorous championing by local authorities and at a time of cuts, it is hard to see where the appetite will come from.

Still, early indications suggest that social pedagogy can improve practice in children's homes. "In some cases, social pedagogues have changed the way risk assessments are completed, so that young people can do more things and staff can be more spontaneous in responding to young people's requests," says Cameron. "Above all, working with social pedagogues has increased the confidence of children's home staff."

This may ensure that the project's final report – due out in the next few months – catches government interest. Children's minister Tim Loughton recently visited one of the pilot care homes in Wiltshire. Cameron says she hopes that he now has a better grasp of a discipline from which we have a lot to learn.